Dive Brief:
- Gen Restaurant Group, parent of Gen Korean BBQ, has raised $43.2 million through its initial public offering, nearly double the company’s initial expectation of raising $25 million, the company said Tuesday.
- The company, which began trading Wednesday, priced its stock at $12 per share and issued 3.6 million shares of Class A common stock. It granted underwriters the option to purchase an additional 540,000 shares through Friday.
- Gen Restaurant Group is the second restaurant chain to begin trading on the New York Stock Exchange this year following Cava’s successful IPO, which raised $318 million earlier this month.
Dive Insight:
Gen Restaurant Group will use the proceeds from the IPO to purchase newly issued Class A units of Gen Restaurant Companies. The holding company will be the sole managing member of these units. As the managing member, the company “intends to cause Gen LLC to use the proceeds for general corporate purposes, including new restaurant openings,” according to the press release.
Gen Korean BBQ restarted its development in 2022 following the easement of COVID-19 restrictions. The company has opened three locations and signed nine additional leases since then. This year it plans to open six or seven locations, then step up to an annual pace of eight to 10 restaurants in new and existing markets in subsequent years. Gen Korean BBQ offers guests an interactive experience in which they cook their own meats at the table.
Gen has grown its average revenue per restaurant to $5.6 million as of the first quarter of this year, more than double its average of $2.2 million at the end of 2020, as detailed by Placer.ai. Fast-recovering foot traffic likely played into this revenue growth. By the end of Q1 2023, quarterly foot traffic per venue was 46.3% higher than the casual dining average, according to Placer.ai data.
“Much like other brands, GEN is likely benefiting from the evolution of consumer taste preferences due to a variety of factors,” Placer.ai’s content writer Ezra Carmel said. “Social media, access to a variety of options through third-party delivery, demand for better-for-you offerings, increased television programming devoted to food, and the globalization of restaurant concepts and menu innovations are all likely playing a part in GEN’s success.”
Gen Restaurant's launch on the NYSE may do well given Cava’s success. Gen’s stock price rose to $18 shortly after it began trading on Wednesday and closed at just over $15 per share. Cava went public about two weeks ago with an initial stock price of $22, which went as high as $45 and closed at $43 during its first day of trading. Its stock price remained above $40 as of Wednesday. Panera Brands also is likely to go public in future quarters. It previously updated its leadership team to prepare for its eventual IPO. Fat Brands is also looking to make its Twin Peaks brand public as early as next year.
This uptick in IPOs contradicts earlier analysis that suggested 2023 wouldn’t be a good year to go public due to compressed margins and profitability struggles at restaurants. However, consumer interest has remained strong in the segment, giving investors possibly renewed interest in restaurant stocks.
